The NHL's Most Valuable Teams

The NHL is scoring off the ice like never before thanks to its Canadian teams.

The average NHL team now has an enterprise value (equity plus net debt) of $413 million, 46% more than a year ago. For the first time since Forbes began tracking NHL team values in 1998, three of the league's five most valuable teams--Toronto Maple Leafs($1.15 billion), Montreal Canadiens ($775 million), Vancouver Canucks ($700 million)--are Canadian. The New York Rangers ($850 million) and defending Stanley Cup champion Chicago Blackhawks ($625 million) are the two U.S. teams to make the top five. And this is also the first time that every Canadian franchise ranks among the top 16 in the 30 team league.

Why is this so important for the NHL? Because hockey was born in Canada. Nurtured there. And it is where the majority of the game's stars are born and hone their skills. In Canada, hockey is not just another professional sport. The ice is where character is measured. Hockey isn't a religion in Canada. It is the religion. This passion delivers at the turnstiles--regardless of market size.

Last season, six of the seven Canadian teams charged an average ticket price for non-premium seats of at least $70, compared with a league average of $64. And the five most expensive average ticket prices were charged by Canadian franchises--Toronto ($120), Montreal ($99), Winnipeg Jets ($95), Vancouver ($90), Edmonton Oilers ($79). Ticket revenues in the NHL are the Mother's Milk of profits because the home team keeps 100% of the gate. The top teams in gate receipts-per-game last season: Toronto ($2.2 million), Montreal ($2.1 million), Vancouver ($1.8 million), New York Rangers ($1.8 million), and Calgary Flames and Edmonton Oilers tied at ($1.6 million).

Operating income (earnings before interest, taxes, depreciation and amortization) averaged $7 million per team during the lockout-shortened 2012-13 season, the second most since the 1997-98 season. The profitability power play was led by the Canadian teams, with the Maple Leafs ($48.7 million) and Canadiens ($29.6 million) finishing one-two in operating income, and each of the five other Canadian franchises making enough money to finish in the top half of the league.

No longer burdened by a weak currency (NHL players are paid in U.S. dollars) and antiquated arenas, even small market Canadian teams like the Edmonton Oilers (moving into a $480 million arena in three years) and Calgary Flames--financial doormats a decade ago--are among the financially strongest franchises in the NHL. Another small market team, the Jets, are now worth $340 million, twice what True North Sports & Entertainment paid to rescue the franchise from Atlanta two years ago. While teams like the Florida Panthers have to almost give tickets away and lose money, the Jets have a waiting list for tickets and posted operating income of $6.3 million last season.

Canada will soon be bringing the NHL more wealth. The league's six-year, $600 million television deal with CBC, which includes Hockey Night in Canada, expires after this season. The renewal of that deal will likely see CBC share some games with TSN or Rogers Sportsnet, and go for around $200 million a season, surpassing the 10-year, $187 million a season national broadcast agreement the NHL has with NBC Sports that began with the 2011-12 season. Such a deal would mean a bigger increase in revenue for Canadian teams because even though 65% of they money will go to the 23 U.S. franchises, on a per-team basis the seven Canadian franchises will get almost double the amount of their American rivals.

Another reason for the surge in team values: the trillions of dollars the Federal Reserve has pumped into the financial system the past five years has fueled a surge in stock prices and inflated asset values. The enterprise ratio (enterprise value divided by operating income) of the S&P 500 index has increased to 11 from 8 since 2008. When private equity billionaire Josh Harris is willing to pay $320 million for the money-losing New Jersey Devils--even though the next highest offer was $240 million--you know money is cheap.

At the bottom of this post you can watch a video of the discussion Bob Lorenz, Rich Brand and I had about NHL valuations during the current episode of Forbes SportsMoney on the YES Network.

Our data comes primarily from sports bankers, public documents (municipal arena leases and financial reports), consultants who provide research and conduct studies for cities on the economic impact of an NHL team, arena naming rights and arena financing experts, credit rating agencies, player agents, network and cable executives, arena operators and, in a few cases, the teams themselves. Our revenue figures include proceeds from non-NHL events that go to the team owner, such as concerts, and subtract arena-generated funds that are used to pay arena debt, and are adjusted for the league's revenue-sharing system.

In short, we look at cash in versus cash out from those events that accrue to the team's owner, which can cause our numbers to be different from what the teams report. For example, the Blackhawks claim to be losing money despite having won two of the last four Stanley Cups and playing in the third-biggest U.S. market. Team owner Rocky Wirtz might be able to truthfully make that claim because he parks certain arena revenue, like suites rentals, at a separate joint venture that owns the United Center. But since Wirtz owns 50% of the JV we give a proportional share of the JV's revenue and expenses to the Blackhawks. The Montreal Canadiens have also publicly disputed our numbers, but when team's figures became public Forbes was vindicated.